In this article, Sean Smyth – Print Consultant with Smithers Pira examines the results of a new report that looks at the growth of Digital Print for Packaging to 2022. This report breaks down the projected growth by packaging application, and shows some surprising results.
In 2016 Smithers Pira published the latest version of what has proved to be a well-received report: “The Future of Digital Print for Packaging to 2022”. It looks at the trends, drivers, applications and new technology that is shaping the future production landscape of packaging and labels, with forecasts of the market development over the next five years. These years will see major changes as digital production goes mainstream that will make many brands and retailers look at packaging in new ways, making converters do different things as new supply chains develop.
In 2017 digitally printed labels and packaging add up to an overall $13.2 billion market globally. The label sector was the early adopter and is pretty mature in most regions. There is very strong growth in corrugated as very high performance single pass presses capable of tens of millions of square meters of output annually are snapped up by converters, cartons, flexible packaging and direct-to-shape, with developments in metal printing. In 2022 the sector will grow to be worth $23.2 billion after five healthy years of growth averaging 11.2% in value terms. Tonnage grows at an average CAGR of 28.1%, as cartons and the corrugated packaging comes on stream. So, no wonder you are reading the article – hopefully considering how your organization can take advantage of this growth. You are not alone.
The $13.2 billion is big, but digital packaging is only 3.33% of printed packaging and perhaps a little over 2.0% of all packaging (as there is so much non-printed). In terms of printed area the equivalent of 163 billion A4 prints is just 1.72% of the total, while the 1.7 million tons of products represents just under 1.03% of all packaging. By 2022 the $23.2 billion digital packaging sector will account for nearly 5.3% of packaging by value, the 334 billion A4 prints will be some 3.2% of the print area output while almost six million tons is also 3.2% of the total. So even after five years of very strong growth digital will still be a tiny minority – hardly the major disruption predicted by some. But it is a significant base that will set the stage for major changes in supply chains, and even the functions of packaging which are developing.
Growth is forecast in different applications and different regions at varying rates as shown in the figure, led by the small flexible packaging, metal and rigid plastics while corrugated, cartons and labels are the drivers of real volume growth.
Five-year growth rates in the value of digital packaging sectors from 2012 to 2022. Source: Smithers Pira
As more converters get involved and make investments they will find out how the technologies can be used to benefit their customers. There will be new campaigns and these will be copied, and converters will provide new services and response to their customers which will allow significant supply chain efficiencies, some of which are not clear in early 2017, but will open up over the next years to better suit the final packaging consumers. Satisfying buyers is the goal for all parties.
The digital packaging sector is maturing. Around 2010 the big question for brands and converters was: “What can the technology do?”, and what should it do. After seven years of concentrated development the question has changed to: “Where is the application value?” as all parties across the supply chains realize that using digital printing can help make them money. This is the case for brands/retailers (and their agencies including design), as well as for packaging and label converters, some of whom are really prospering. It is also true for the equipment/consumable suppliers as well, although not all have succeeded.
Drupa 2016 saw a real step-change in the quality and performance of digital printing, from established suppliers and newcomers into the digital arena who are experienced in packaging. HP is the market leader with thousands of Indigo presses producing very high-quality labels, cartons and flexible packaging while its inkjet monster presses are making inroads into corrugated. But HP is by no means alone as others push their quality, productivity and improve their cost of production position. There are important breakthroughs in new substrates and surface treatments, in finishing where digital methods are also making progress, and most importantly in workflow improvements.
Net earnings improved during the second quarter of 2017 to $7 million, a $15 million increase, versus an $8 million net loss in 2016, despite a 6.7% decrease in net sales to $963 million. Organic sales decreased 4.8% due to ongoing industry volume and pricing pressures after excluding pass-through paper sales (-1.7% impact) and foreign exchange (-0.2% impact). The organic sales decrease is consistent with the Company’s previous guidance. Diluted earnings per share improved to $0.13 compared to a $0.16 loss in 2016 primarily due to lower depreciation and amortization, and cost reductions and productivity improvement activities. Second quarter 2017 Non-GAAP Adjusted EBITDA decreased $1 million to $97 million compared to $98 million in 2016; however, Adjusted EBITDA margin improved to 10.0% from 9.5% in 2016. Non-GAAP Adjusted Diluted Earnings per Share improved by $0.21 during the second quarter 2017 to $0.24. The improvement in Adjusted EBITDA margin and Adjusted Diluted Earnings per Share was primarily due to cost reductions and productivity improvement activities. Click Read More below for additional details.
HP Inc. expanded its 3D printing portfolio with the announcement of the new HP Jet Fusion 3D 4210 Printing Solution. Designed for industrial-scale 3D manufacturing environments, the new solution significantly lowers overall operating costs while increasing production volume capabilities, raising the “break-even point” for large-scale 3D manufacturing to up to 110,000 parts1 and enabling the industry’s lowest cost-per-part (CPP) - up to 65% less than other 3D printing methods.2 Existing Jet Fusion customers can pre-order the 3D 4210 Printing Solution upgrade today, and new customers can purchase Jet Fusion systems now with the option to pre-order the 4210 system upgrade.3 HP also announced the expansion of its innovative Open Materials Platform with new partners Dressler Group and Lubrizol, as well as three new forthcoming 3D printing materials: HP 3D High Reusability PA 11 and HP 3D High Reusability PA 12 Glass Beads4, and the future availability of HP 3D High Reusability Polypropylene. The new materials, developed at HP’s innovative 3D Open Materials and Applications Labs, will broaden the uses and capabilities of HP Multi Jet Fusion technology and open a world of new high-volume applications. Click Read More below for additional information.
*Net Sales — Net sales were $706 million in the first quarter of 2021, down 14% from the same period in 2020, primarily due to the economic impact from the COVID-19 pandemic, and ongoing print industry volume pressures. The first quarter decline represents a third quarter of sequential revenue improvement during the pandemic, as compared to a 21% decline in the fourth quarter of 2020, a 28% decline in the third quarter of 2020 and a 38% decline in the second quarter of 2020. *Net Earnings (Loss) From Continuing Operations — Net earnings from continuing operations were $10 million or $0.19 diluted earnings per share in the first quarter of 2021, an increase of $19 million compared to the first quarter of 2020, which recorded a net loss of $9 million or $0.17 diluted loss per share. *Net Cash Provided by Operating Activities — Net cash provided by operating activities increased by $28 million to $73 million in the first quarter of 2021, as compared to $45 million in the same period in 2020, primarily due to improvements in working capital.
